A firm of partners can e “registered’ with the Registrar of Firms appointed by the government in the area concerned, by delivery to him personally or through the post of a statement on a prescribed form with a prescribed fee for registration containing:
(i) Names in full and permanent address of the partners, and the duration of the firms.
(ii) The name of the firm.
(iii) The date on which each partner joined the firm.
(iv) The principal place of its business, and
(v) Names of many other place or places where the firms carries on business.
This statement must be signed by all the partners or their duly authorized agents. Thought registration is said to be optional and not compulsory, the sections are so framed that sufficient indirect is brought to bear on the partners with a view to forcing the firm to be registered.
This is because of the following reasons:-
(i) A partner of such an unregistered firm cannot file a suit to enforce a right arising from a contract or conferred by the Partnership Act, against the firm or against any person who is alleged to be partner in the firms.
(ii) On the same footing the unregistered firms or partnership cannot sue in any Court an outsider, i.e., a third party, for any rights arising from a contract.
It will thus be seen that the effect of this regulation is bound to be that partners of every important firm will perforce get themselves registered.
Restriction as to Name
A registered firm cannot use words in connection with their name such as ‘Grown,’ ‘Emperor,’ ‘Empress,’ ‘Empire,’ Imperial,’ ‘King,’ ‘Queen,’ ‘Royal,’ or words expressing or implying the sanction, approval or patronage of Government except when the- State Government signifies its consent to the use of such words as part of the firm name by order in writing.
Joint Hindu Family Business
The Joint Hindu Family Firm is a peculiar form of business organisation in India bought into existence by the operation of Hindu law. Under the Mitakshara law, all the property of a Hindu inherited by his heirs is ancestral properly and may have been so inherited from his father, grandfather or great grandfather. This property is held in joint ownership by the heirs in what is called a “Coparcenary.”
The property is managed by the senior male member known as Karta. Thus a Joint Hindu Family firms may be a part of the ancestral business descending to a Joint Hindu Family. This is a peculiar type of partnership in that it is governed by Hindu law and not by the Partnership Act.
This family partnership is not dissolved by the death of a co-parcener and the only person who has the right of management in the partnership is the manager. In case of loss or liability incurred, the co-parcener, are liable only to the extent of their share in the joint family property except the manager whose liability is unlimited like that of a partner in a normal partnership.
(ii) Advantages & Disadvantages
The advantages of a Joint Hindu Family Firm may be said to be (a) Continuity, (b) unity of command and (c) on limit on maximum members as compared to the Partnership. As the Join Hindu Family Firm is not dissolved by the death of a co-parcener, it has a more continuous existence than a partnership firm. Again, as management is in the hands of the Karta only, the Karta enjoys the advantage of a sole trader of taking decisions without consulting others.
The legal restriction on partnership firms, whereby members must not exceed 10 in case of baking and 20 in other types of business, does no apply to Joint Hindu Family Firm. As compared with the sole trader, the Joint Hindu Family Firm has the advantage or perhaps getting more credit as it possesses the property of a group of persons.
As against this there is the disadvantage of limited managerial ability. In a partnership firm, a group of persons with personal interest can help in the management of the business. The fact that the Karta has the whole management of the business also limits the scope of developing managerial ability in the other co-parceners.
Again although the Karta alone takes the trouble of managing the business, the benefits are shared by all the co-partners. This may dampen the enthusiasm of the karta. As against the joint stock company, the financial resources are extremely limited.
The Joint Hindu family system is decline in popularity over the year with the infiltration of western ideas. This has often resulted in breaking up of joint families. Thus this form of organisation may gradually disappear.